At 22 you are the king of the world. Nothing seems to bother you. You are invincible, raring to go and virtually unstoppable. Now pause and take a few steps back. This age, rage, and energy will not last forever. A few years down the line, when you slow down a bit, wisdom will suggest that the future holds no surprises, except old age and financial insecurity.
At 22, your effort to financial security begins.
At first, this might seem to be a scary proposition with too much information floating around, but there is enough reason
- Don’t get flustered with all that has been told to you in the form advice. Take an informed decision based on research. All those numbers around mean nothing if looked into properly.
- Start saving a little and more often. Start putting that in 401(k) and see it slowly rise.
- If you think the social security net will be good enough for you, think again. It is estimated that by 2037, social security benefit requirements will outstrip contributions. As a result of which, it would get difficult for you to sustain after retirement.
- The 401(k) is a reliable ally at this age. Start using it wisely. The money that is invested here is absolutely tax-free. The tax will only be deducted when you take it out. So this instrument is quite handy for a 22-year-old and needs to be made use to its fullest.
- The IRAs too have loads of benefits to make use of. It is an Individual Retirement Arrangement and is virtually tax-free, both on federal taxes, state and local ones. Of course, there are riders involved, but at this age, that should be bothersome.
- Now is the time to be aggressive. At 22, worrying about your retirement, investment becomes an art. Remember, you still have another 20 years or 30 years to go before you hang your boots up. You can take a risk now. Look out for stocks and bonds. With age, you can slowly change tracks and become conservative. Now is not the time.
- There are nontraditional ways to invest too. Heard about ETF (Exchange Traded Funds). They can be bought and sold at any time and is just a regular stock in disguise.
- Last but not the least. Stop worrying, start saving. That is the only way forward.